EXHIBIT 10.11
DATED 8TH SEPTEMBER 1995
(1) BRITOIL PUBLIC LIMITED COMPANY
(2) READING & XXXXX (CALEDONIA) LIMITED
(3) READING & XXXXX CORPORATION
HEADS OF AGREEMENT
for the provision of
VESSEL SERVICES
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THIS AGREEMENT is made the 8th day of September 1995
BETWEEN:
(1) BRITOIL PUBLIC LIMITED COMPANY whose registered office is at
Xxxxxxxx Xxxx, Xxxxxxx Xxxxxxxxxx Xxxxxx, Xxxx, Xxxxxxxx XX0 OPB
("Britoil")
(2) READING & XXXXX (CALEDONIA) LIMITED whose registered office is at
Xxxxxx House, 0 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx XX0 0XX
("Contractor")
(3) READING & XXXXX CORPORATION, a Delaware corporation having its
principal office at 000 Xxxxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx,
X.X.X. ("Holdings")
(all the above being together herein referred to as "the Parties")
WHEREAS:
(A) The Parties have entered into the Foinaven Services Agreement for
the short term utilisation of the Vessel.
(B) Britoil wishes to utilise the Vessel for the provision of
additional Services by the Contractor.
(C) The Parties wish to set out the terms of their agreement with
regard to the provision of Services and utilisation of the Vessel
after Conversion.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1.1 Definitions
In this Agreement, except where the context otherwise requires,
the following words and expressions shall have the following
meanings:
"Britoil"s means any equipment, item or material supplied,
Equipment" owned or hired by Britoil Group (other then
Contractor's Equipment) in connection with the
Services;
"Contractor's means the Vessel and any equipment, item or
Equipment" material supplied, owned or hired by the Contractor
Group in connection with the Services;
"Affiliate" means in respect of Britoil, The British Petroleum
Company plc and any company which is a subsidiary
of The British Petroleum Company plc within the
meaning of the Companies Xxx 0000;
"Affiliate" means in respect of the Contractor and/or Holdings
any company which is a subsidiary or holding
company of the relevant company or another
subsidiary of any such holding company, where
"subsidiary" and "holding company" shall have the
meanings assigned to them under Section 736 of the
Companies Xxx 0000;
"Agreement" means this agreement together with the Schedules;
"Britoil means Britoil and its Affiliates, co-venturers,
Group" agents and its or their employees, directors and/or
officers;
"Compensation" means the compensation payable to the Contractor
pursuant to Clause 8;
"Contractor means the Contractor and its Affiliates, sub-
Group" contractors, agents and its or their employees,
directors and/or officers;
"Conversion" means the conversion of the Vessel in accordance
with Clause 6;
"Conversion means the earliest of 1st June 1996 (or such other
Acceptance date as the Parties may agree) or such date when
Date" the maritime surveyor referred to in Clause 6.4
issues his final binding decision;
"Conversion means 1st June 1996 or such other date as the
Completion Parties may agree;
Date"
"Day" means any period of 24 hours commencing at 00.01
hours on any day and ending at 00.00 hours on the
following day;
"Event of means any event where:
Default"
(a) an order is made or a resolution (whether
requiring confirmation or not) is passed for
the winding up of the Contractor; or
(b) (without the prior written consent of Britoil)
the Contractor suspends payment of its debts,
becomes unable or admits in writing its
inability to pay its debts, makes a general
assignment for the benefit of or enters into
any composition or arrangement of any kind
with its creditors, ceases or threatens to
cease to carry on business or disposes of all
or (without the prior written consent of
Britoil) a substantial part of its assets; or
(c) a receiver, administrator, administrative
receiver or trustee is appointed in respect of
the Contractor or over all or substantially
all of its assets; or
(d) there occurs any of the events specified in
(a) to (c) above or any event analogous
thereto in relation to Holdings;
"Execution Date" means 31st October 1995 or such later date as
Britoil and the Contractor may agree;
"Foinaven meand the agreement of even date herewith
Services between Britoil and the Contractor for the
Agreement" provision of services by the Contractor in the
Foinaven Field;
"Gainshare means the minimum continuous period of 200
Period" Days in each Year referred to in Clause 7.2
notified to the Contractor pursuant to Clause
7.3;
"Operating Area" means the United Kingdom Continental Shelf;
"Option Notice" means any notice served on Britoil by the
Contractor pursuant to Clause 7.5;
"Option Period(s)" means the period(s) in any Year (during the
continuance of the Service Agreement) outwith
the nominated Gainshare Period;
"Option Rate" means US $66,500 per Day;
"Outstanding means those matters listed in Schedule 3;
Matters"
"Maximum Rate" means US $85,000 per Day;
"Minimum Rate" means US $48,000 per Day;
"Performance
Criteria" means the performance criteria for the Vessel
after Conversion as set out in Schedule 2;
"Schedules" means the 5 schedules to this Agreement;
"Services means the services agreement to supersede this
Agreement" Agreement in accordance with Clause 2;
"Services" means the services to be provided by the
Contractor to Britoil using the Vessel more
particularly set out in Schedule 1 (for the
avoidance of doubt, Services does not include
the provision of equipment or personnel of
third parties provided by or for the account
of Britoil, as set out in Schedule 1);
"Specification" means the specification of the Vessel and
associated equipment after Conversion to
support the performance of the activities set
out in Schedule 1;
"Specification means the earliest of 10th November 1995 or
Approval Date" such date when the maritime surveyor referred
to in Clause 6.3 issues his final binding
decision;
"Specification means 31st October 1995;
Proposal Date"
"Standard" means the standard required to ensure that
after Conversion the Vessel is in Class,
conforms with the Specification, meets the
Performance Criteria and is capable of
performing the Services in accordance with
good oil and gas field practice and complies
with all necessary licensing, regulatory and
governmental authorities applicable in the
Operating Area;
"Vessel" means the semi-submersible Vessel Iolair; and
"Year" means a period beginning at 00.01 hours on 1st
January in any year and ending at 00.00 hours
on 1st January of the next succeeding calendar
year.
1.2 The construction of this Agreement shall not be affected by any
heading herein.
1.3 This Agreement shall incorporate the Schedules which shall form
part hereof. If there is any inconsistency between the main body
of this Agreement and the Schedules or among the Schedules then
the main body of this Agreement shall have priority and thereafter
precedence shall be in descending order as listed below:
Schedule 1 Functional Service Specification
Schedule 2 Performance Criteria
Schedule 3 Outstanding Matters
1.4 The Parties agree that the definitions used in this Agreement
reflect the principles to be followed in the Services Agreement
but may require to be adjusted by mutual agreement to reflect the
requirements of the Services Agreement.
2. Finalisation of Services Agreement
2.1 The Parties have entered into this Agreement because certain
constraints make it impractical to finalise the terms and
conditions of the Services Agreement as at the date hereof. The
Parties agree that notwithstanding the execution of this Agreement
the Parties will work together in an efficient and constructive
manner to procure the resolution of the Outstanding Matters and
the execution of the Services Agreement as soon as reasonably
practicable and in any event by the Execution Date. For the
avoidance of doubt no Services will be provided and no payment
will be due or made until the Parties have executed the Services
Agreement.
2.2 The Services Agreement will incorporate the main principles set
out in this Agreement and will be negotiated to ensure that the
Services Agreement reflects the intent of this Agreement and has
full details reflecting the commercial, operational and practical
requirements relating to the provision of the Services. The
Parties agree that the terms of the Foinaven Services Agreement
shall provide the basis for discussion and the reaching of
agreement with regard to matters not already addressed in this
Agreement with such changes as may be deemed necessary or
appropriate to incorporate the principles set out in this
Agreement.
2.3 The services Agreement will consist of the following:-
Section "A" Scope of Service
Section "B" Remuneration
Section "C" Conditions of Contract
3. Aims and Objectives
The primary purpose of the gainshare arrangements set out in
Clauses 7 and 8 is to achieve business alignment between Britoil
and the Contractor. Britoil's primary objective is to cost
effectively support and maintain its development of substantial
oil production from subsea facilities in deepwater areas west of
Shetland. Britoil also has a requirement for subsea services
elsewhere in the Operating Area. Specifically Britoil requires:-
(a) conversion of the Vessel to provide the Services;
(b) flexible access to the Vessel year round with emphasis on
availability during good weather periods;
(c) the Contractor to enter into "alliance" arrangements with
Britoil's chosen well intervention and subsea service
providers; and
(d) a simple and effective process for management of the Vessel
whereby Britoil undertakes to plan utilisation of the Vessel,
giving Contractor as much notice as is practical under the
circumstances, and the Contractor takes responsibility for
marketing the Vessel outwith the times it is required by
Britoil.
The Contractor's objective is to achieve a reasonable return on
investment by sustaining high levels of utilisation of the Vessel
throughout the year from a combination of Britoil and third party
business.
It is envisaged that in due course an "Intervention Alliance" may
be formed to align all service providers involved with the
operations of Britoil west of Shetland. The Contractor will
actively participate in any such "Intervention Alliance". Within
this alliance it is Britoil's intention to agree on a risk/reward
arrangement which will motivate the participators to:-
(a) provide improved HSE performance;
(b) develop cost savings;
(c) improve vessel flexibility and responsiveness; and
(d) continually improve.
4. Duration
This Agreement shall commence the date hereof and shall continue
until superseded by the Services Agreement.
5. Warranty
5.1 The Contractor warrants that:-
(a) Contractor's Equipment shall be fit for the performance of
the Services to the Standard;
(b) it has or will procure the ability, qualifications, resources
and personnel to perform the Conversion and the Services;
(c) it shall perform or procure the performance of the Conversion
and/or the Services in the timely manner and in accordance
with the Standard and to Britoil's reasonable satisfaction;
(d) the Services, including all Contractor's Equipment and all
workmanship and designs carried out or procured by the
Contractor in connection with the Conversion and the Services
shall comply in all respects with this Agreement and the
Standard and shall be free from any material defects; and
(e) it has full power and authority to enter into this Agreement
and the Services Agreement.
6. Conversion
6.1 The Contractor and Britoil agree that as at the date hereof the
Vessel may not be fit for purpose to carry out the Services.
6.2 It is a fundamental term of this Agreement that by the
Specification Proposal Date the Contractor will work with Britoil
to provide a detailed proposal, including but not limited to,
plans, drawings, specifications and timetable and such other
information relating to the Conversion as Britoil may reasonably
require relating to the completion of the Conversion of the
Vessel. Britoil will assist the Contractor as far as is
reasonably practicable with regard to the preparation of such
proposal.
6.3 On or before the Specification Approval Date the Contractor and
Britoil shall agree the Specification of the Vessel to comply in
all respects with the Standard. If the Parties fail to reach such
agreement by the Specification Approval Date then either of
Britoil or the Contractor may refer the matter to an agreed
independent maritime surveyor of international repute who shall
review all relevant information and within 14 Days of referral to
him provide the Parties with his final written binding decision
detailing the works required to ensure that after the Conversion
the Vessel will comply with the Standard. The costs of such
surveyor shall be borne 50% by Britoil and 50% by the Contractor.
6.4 The Contractor agrees that on or before the Conversion Acceptance
Date all necessary works shall have been carried out so that the
Vessel complies in all respects with the Standard. If the Parties
do not agree that the Vessel meets the Standard by the Conversion
Acceptance Date then either of Britoil or the Contractor may refer
the matter to an agreed independent maritime surveyor of
international repute who shall review all relevant details as
aforesaid and within 14 Days (or as soon thereafter as reasonably
practicable) of referral to him provide the Parties with his final
written binding decision detailing the works (if any) required to
complete the Conversion to the Standard. The costs of such
surveyor shall be borne 50% by Britoil and 50% by the Contractor.
6.5 The Contractor will take all actions reasonably necessary
regardless of cost or expense to procure the completion of the
Conversion (Including but not limited to a full audit of the
Vessel and all necessary testing and approval by appropriate
licensing, regulatory and governmental authorities applicable in
the Operating Area) by the Conversion Completion Date.
6.6 For the avoidance of doubt Britoil shall not be liable for and the
Contractor shall be liable for, indemnify and hold harmless
Britoil and its Affiliates in respect of any claims, losses,
damages, costs, expenses and liabilities of whatever nature
arising in respect of the Conversion howsoever caused and
irrespective of the negligence or breach of duty (statutory or
otherwise) of the Britoil Group, except as otherwise provided in
Clauses 13.1(b) and 13.3 below.
7. Vessel Utilisation
7.1 Britoil may use the Vessel in accordance with this Clause 7
anywhere within the Operating Area where it or any of its
Affiliates is the designated operator for such area, where the
Vessel can safely operate within its capabilities.
7.2 The Contractor shall during each Year from 1st January 1996 until
31st December 2000 provide the Vessel to perform the Services for
Britoil for a minimum continuous period of 200 days.
7.3 By 1st November in each Year referred to in Clause 7.2 and on 1st
November 1995 Britoil shall, unless the Parties agree otherwise,
notify the Contractor in writing of the Gainshare Period for the
following Year.
7.4 The Contractor may, in consultation with Britoil for periods
during the Gainshare Period when Britoil does not require the
Services, with Britoil giving Contractor as much notice as is
reasonably practical under the circumstances, market the Vessel to
third parties for the provision of services at the open market
rate for utilisation of the Vessel. Income derived from such
third party business will, subject always to the provisions of
Clause 8, be paid direct to the Contractor.
7.5 The Contractor shall be entitled each Year from 1st January 1996
until 31st December 2000 to market the Vessel to third parties for
the provision of services during the Option Period(s). Prior to
entering into any binding contractual commitment with any bona
fide third party offering a serious proposal for utilisation of
the Vessel the Contractor shall, where scheduled commencement of
mobilisation of the Vessel for the provision of such services is
more than four calendar months away, provide Britoil with a
written Option Notice detailing the terms of such proposal.
Within 7 calendar Days of receipt of any Option Notice Britoil
will notify the Contractor if Britoil exercises its option to
utilise the Vessel for the same duration or longer during the
period specified in the Option Notice.
The day rate applicable during utilisation of the Vessel by
Britoil in such circumstances during the Option Period shall equal
the day rate offered by such third party if it falls between the
Minimum Rate and the Maximum Rate but for the avoidance of doubt
shall not be less than the Minimum Rate and not be greater than
the Maximum Rate. Should Britoil fail to exercise its option
hereunder then the Contractor shall be entitled to enter into a
contract for the utilisation of the Vessel by such third party
during the Option Period.
7.6 Britoil may at any time contract to use the Vessel to provide the
Services during the Option Period (subject to the provisions of
Clause 7.5) at the Option Rate.
7.7 If the Contractor can clearly demonstrate to Britoil's reasonable
satisfaction that the operating costs of the Vessel have increased
substantially in any Year the element of Maximum Rate, Minimum
Rate and Option Rate which is directly attributable to operating
cost shall be increased on 1st November in such Year in accordance
with the Retail Price Index. The base date for such calculation
shall be 1st January 1996.
7.8 Notwithstanding the foregoing provisions of this Clause 7, Britoil
may assign its rights under the Services Agreement to any third
party in respect of any Day during any Gainshare Period or Option
Period where Britoil has previously firmly committed to utilise
the Vessel during such Day.
7.9 The operational aspects relating without limitation to
mobilisation, demobilisation, delivery, redelivery, standby,
downtime, mechanical failure and repair of the Vessel shall
reflect in all respects the principles set out in the Foinaven
Services Agreement. For the avoidance of doubt Britoil shall not
be responsible for mobilisation or demobilisation of the Vessel
when the Vessel is to be utilised by a third party outside the
Operating Area. When the Vessel is mobilised or demobilised by
Britoil and there is no work location for the Vessel to proceed to
or from then mobilisation or demobilisation will be on the basis
the Vessel is always mobilised from the demobilised to Invergordon
before and after use of the Vessel by Britoil. If the Vessel is
continuing to a new work location Britoil shall cease to be
responsible for demobilisation costs as soon as the Vessel is
clear of Britoil's last location. If the Vessel is coming direct
from another location to work for Britoil then Britoil shall be
responsible for mobilisation costs as soon as the Vessel is clear
of its last location.
7.10 The Parties agree that circumstances may arise during either the
Gainshare Period or the Option Period that make it desirable for
the Vessel to operate within the Norwegian Continental Shelf.
Where such operations are at the request of Britoil then Britoil
and the Contractor will agree the terms (on a case by case basis)
on which any necessary upgrade to the Vessel and subsequent Day
rate are charged. Where use of the Vessel by a third party within
the Norwegian Continental Shelf is envisaged at any time then no
additional cost or expense will be payable by Britoil.
8. Compensation
8.1 In consideration of the Services provided by the Contractor
hereunder, Britoil shall pay to the Contractor the Compensation.
The Compensation shall be calculated in accordance with this
Clause 8.
8.2 During the Gainshare Period Britoil shall pay to the Contractor on
a monthly basis in arrears:-
(a) the Minimum Rate for each Day during the preceding month that
the Vessel was being utilised by Britoil; and
(b) 50% of the Minimum Rate for each Day during the preceding
month that the Vessel was stacked.
The Contractor shall submit an invoice to Britoil for the
sums payable under this Clause 8.3 within 3 Working Days of
the end of such month and Britoil shall pay such correctly
invoiced sums within 10 Working Days of receipt of invoice.
8.3 During the Gainshare Period the Contractor shall provide Britoil
with a schedule monthly in arrears, setting out the revenue
received by and/or payable to the Contractor in respect of third
party utilisation of the Vessel during the preceding month.
8.4 Within ten days of the end of the Gainshare Period the Contractor
shall (if TPR is greater than the Minimum Rate) pay to Britoil by
way of reduction in the Compensation the sum equal to "T" which
sum is calculated as follows:-
T = TPD x (TPR - Minimum Rate)
2
8.5 Within ten days of the end of the Gainshare Period Britoil shall
(if TPR is less than the Minimum Rate) pay to the Contractor by
way of increase in the Compensation the sum equal to "TL" which
sum is calculated as follows:-
TL = TPD x (Minimum Rate - TPR)
2
8.6 For the purposes of this Clause 8 the following words and
expressions shall have the following meanings:-
"TPD" means the number of Days during the Gainshare
Period that the Vessel is utilised by third
parties; and
"TPR" means the average day rate paid for third party
utilisation of the Vessel during the Gainshare
Period.
8.7 For the avoidance of doubt no sums shall be payable by the
Contractor to Britoil in respect of any income payable to or
received by the Contractor for utilisation of the Vessel during
the Option Period.
8.8 The Parties agree that during the 1996 Gainshare Period the
Conversion may not be complete and that in such circumstances the
Minimum Rate may not be an appropriate Day rate and accordingly
the Parties will agree a Day rate for the provision of Services
which will be between US $30,000 and the Minimum Rate per Day to
reflect progress made with the Conversion as at such time.
9. Services
9.1 The Contractor and Holdings will ensure that at all times
throughout the period of the Services Agreement the Vessel
complies in all respects with the Standard.
9.2 The Contractor will operate the Vessel on a 24 hour basis and will
ensure that the Vessel is provided with sufficient crew to operate
and manage the Vessel in accordance with good oil and gas field
practice and to Britoil's satisfaction.
10. Force Majeure
The Services Agreement will contain provisions relating to force
majeure which reflect in all respects the principles set out in
the Foinaven Services Agreement.
11. Taxation
The Services Agreement will contain provisions relating to
taxation which reflect in all respects the principles set out in
the Foinaven Services Agreement.
12. Health, Safety and Environment
The Services Agreement will contain provisions relating to Health,
Safety and Environment which reflect in all respects the
principles set out in the Foinaven Services Agreement.
13. Liability and Indemnity
13.1 (a) The Contractor shall defend, indemnify and hold harmless the
Britoil Group, from and against any and all liability for
loss, damage or destruction of the Contractor's Equipment and
any other property of the Contractor Group in connection with
this Agreement and/or the Services Agreement whether arising
under contract or in tort, and against all costs, claims,
demands, proceedings and causes of action resulting
therefrom, regardless of how such loss, damage or destruction
occurs, and irrespective of the negligence (whether sole or
contributory) or other fault of or breach of duty or
statutory strict liability of the Britoil Group.
(b) Britoil shall defend, indemnify and hold harmless the
Contractor Group, from and against any and all liability for
loss, damage or destruction of Britoil's Equipment and any
other property of the Britoil Group in connection with this
Agreement and/or the Services Agreement whether arising under
contract or in tort, and against all costs, claims, demands,
proceedings and causes of action resulting therefrom
regardless of how such loss, damage or destruction occurs,
and irrespective of the negligence (whether sole or
contributory) or other fault or breach of duty or statutory
strict liability of the Contractor Group.
13.2 The Contractor shall defend, indemnify and hold harmless the
Britoil Group, from and against any and all liability for death,
illness or injury to any of the Contractor Group in connection
with this Agreement and/or the Services Agreement whether arising
under contract or in tort, and against all costs, claims, demands,
proceedings, and causes of action resulting therefrom, regardless
of how such death, illness or injury occurred, irrespective of the
negligence (whether sole or contributory) or other fault or breach
of duty or statutory strict liability of the Britoil Group.
13.3 Britoil shall defend, indemnify and hold harmless the Contractor
Group, from and against any and all liability for death, illness
or injury to any of the Britoil Group in connection with this
Agreement and/or the Services Agreement whether arising under
contract or in tort, and against all costs, claims, demands,
proceedings and causes of action resulting therefrom, regardless
of how such death, illness or injury occurred, irrespective of the
negligence (whether sole or contributory) or other fault or breach
of duty or statutory strict liability of the Contractor Group.
13.4 The Contractor shall assume all responsibility for and shall
defend, indemnify and hold harmless the Britoil Group, from loss
or damage arising from pollution or contamination of any nature or
substance whatsoever from consumable products such as diesel,
lubricants or grease (except as otherwise provided in sub-clause
13.5(d) below) originally taken to the Vessel by or on behalf of
the Contractor or emanating from Contractor's Equipment for the
purpose of the conduct of the Services by the Contractor
irrespective of whether such loss or damage is caused by the
negligence (whether sole or contributory) or other fault or breach
of duty or statutory strict liability of the Britoil Group.
13.5 Subject to the provisions contained in sub-Clauses 13.1, 13.2 and
13.4, Britoil shall assume all responsibility for and shall
defend, indemnify and hold harmless the Contractor Group, from
loss or damage arising from the following events irrespective of
the negligence (whether sole or contributory) or other fault or
breach of duty, or statutory strict liability of the Contractor
Group:
(a) loss of or damage to any Well or, for loss of or any damage
to any formation or reservoir or mineral resources;
(b) blowout or other uncontrolled flow of oil or gas or other
substances originating from any Well up to the point of
discharge of same into the Contractor's Equipment including
the cost of bringing the Well under control;
(c) loss or damage arising from pollution, contamination or
seepage which result from fire, blowout, cratering, or any
loss of control of the hole or other flow of oil, gas or
other substances originating or emanating from the Well; and
(d) pollution or contamination arising from the disposal of oil
materials such as, but not limited to, oil emulsion, oil
based or chemically treated drilling fluids, contaminated
cuttings, lost circulation materials and other substances
where the responsibility for disposal lies with Britoil.
13.6 Notwithstanding any other provision of this Agreement and/or the
Services Agreement the Britoil Group shall not be liable for and
the Contractor shall defend, indemnify and hold the Britoil Group
harmless from and against indirect or consequential losses or
damages (including, without limitation, loss of profit, loss of
product, loss of production or business interruption) suffered by
the Contractor Group in connection with the performance of this
Agreement and/or the Services Agreement whether such loss or
damage is based on contract, negligence, statutory strict
liability or other breach of duty. Notwithstanding any other
provision of this Agreement and/or the Services Agreement the
Contractor Group shall not be liable for and Britoil shall defend,
indemnify and hold the Contractor Group harmless from and against
indirect or consequential losses or damages (including, without
limitation, loss of profit, loss of product, loss of production or
business interruption) suffered by the Britoil Group in connection
with the performance of this Agreement and/or the Services
Agreement whether such loss or damage is based on contract,
negligence, statutory strict liability or other breach of duty.
13.7 Without prejudice to the other provisions of this Clause 13, the
Contractor shall defend, indemnify and hold harmless the Britoil
Group against any and all liability for death, illness or injury
to any third party or for loss of or damage to any third party's
property and against all claims, demands, proceedings and causes
of action resulting therefrom, to the extent caused or contributed
to by the negligence, statutory strict liability or other breach
of duty on the part of the Contractor Group.
13.8 Without prejudice to the other provisions of this Clause 13,
Britoil shall defend, indemnify and hold harmless the Contractor
Group from and against any and all liability for death, illness or
injury to any third party or for loss of or damage to any third
party's property and against all claims, demands, proceedings and
causes of action resulting therefrom, to the extent caused or
contributed to by the negligence, breach of duty or wilful
misconduct of the Britoil Group.
13.9 The benefit of any indemnity given by an indemnifying Party
pursuant to this Agreement and/or the Services Agreement shall
extend to the indemnified Party's group. Therefore, for the
purposes of this Agreement and/or the Services Agreement, Britoil
contracts on its own behalf and expressly as agent on behalf of
and as trustee for the benefit of all persons who are or may be
from time to time part of the Britoil Group and the Contractor
contracts on its own behalf and expressly as agent on behalf of
and as trustees for the benefit of all persons who are or may be
from time to time part of the Contractor Group and all such
persons shall, to this extent, be, or be deemed to be parties to
this Agreement
13.10 The indemnity obligations of this Clause 13 shall continue
notwithstanding the completion or termination of this Agreement.
14. Insurance
The Services Agreement will contain provisions relating to
insurance which reflect in all respects principles set out in the
Foinaven Services Agreement.
15. Liquidated Damages
15.1 It is the intention of the Parties that the liability of the
Contractor and Holdings for its or their inability to perform the
Services under this Agreement as a result of an Event of Default
shall be regulated by the provisions of this Clause 15. Britoil
therefore agrees that it shall only be entitled to recover from
Holding and/or the Contractor and Holdings and/or the Contractor
shall only be obliged to pay to Britoil liquidated and ascertained
damages in accordance with the following clauses 15.2 and 15.3 if
the Contractor and/or Holdings is unable to perform the Services
which it is obliged to perform under this Agreement and/or the
Guarantee and not otherwise following an Event of Default, and
Britoil shall not be entitled to demand liquidated and ascertained
damages as aforesaid if termination of this Agreement occurs by
reason of the term or duration thereof having expired.
5.2 If an Event of Default occurs and as aforesaid the Contractor
and/or Holdings are unable to perform the Services Britoil shall
have the right to recover either directly from Holding and/or the
Contractor or (at Britoil's sole discretion) by deducting from any
monies due or which may become due to the Contractor the sum "LD"
which sum shall be calculated as follows:
LD = ((200 x NG) + DCG)) x (CR - Minimum Rate)
The figure LD shall be discounted to take account of the fact
that it represents advance payment in respect of future loss.
The discount calculation shall be referred by Britoil to a
Chartered Accountant of international repute who shall
ascertain the final figure which represents LD after
discounting, such discount calculation will use as its basis
the then current base rate of the National Westminster Bank
plc. The figure so ascertained will be final and binding on
the Parties and will be deemed to represent LD> The costs of
such Chartered Accountant shall be borne by Britoil. In the
case of Holdings LD shall not exceed US $3,000,000.
15.3 Such payment as aforesaid by Holdings and/or the Contractor shall
be liquidated and ascertained damages for any such Event of
Default and Holdings and the Contractor acknowledge that the
foregoing assessment comprises a genuine pre-estimate of Britoil's
loss. Payment of liquidated damages by Holdings and/or the
Contractor or the deduction thereof by Britoil shall relieve
Holdings and/or the Contractor from its or their obligations under
this Agreement and/or the Guarantee.
15.4 For the purposes of this Clause 15 the following words and
expressions shall have the following meanings:-
"CR" means the Day rate which an independent maritime
surveyor of international repute deems to be the then
current open market Day rate in the Operating Area for a
vessel equivalent in respect of Specification and
Standard to the Vessel. The rate ascertained by such
surveyor shall be final and binding on the Parties and
the costs of such surveyor shall be borne by Britoil;
"DCG" means the number of Days remaining in the then current
Gainshare Period at the time of the Event of Default;
"NG" means the number of Gainshare Periods (excluding the
then current Gainshare Period) remaining under this
Agreement; and
"Guarantee" means the guarantee referred to in Clause 20.
16. Confidentiality
Each of the Parties undertakes to keep matters of a commercially
sensitive nature arising relative hereto, strictly confidential
and shall obtain from its personnel working in connection with
this Agreement appropriate confidentiality undertakings.
17. Assignment
Britoil may assign its rights and obligations hereunder to any
Affiliate at any time. This Agreement is personal to the
Contractor who may not assign, or dispose of any of its rights or
obligations hereunder, or subcontract or otherwise delegate
without Britoil's prior written consent (which consent shall not
be unreasonably withheld) any of its obligations under this
Agreement.
18. Extension of Services Agreement
The Parties will have the right to extend the Services Agreement
for a further period on terms and conditions to be agreed between
Britoil and the Contractor. The Contractor will not commit to
provide the Vessel to any third party after the expiry of the term
of the Services Agreement without prior consultation with Britoil.
In any event the Parties will agree by 31 March 1999 the extension
of the Services Agreement as provided above and with the
applicable contract Day rate not to exceed the then current
Maximum Rate and not be less than the then current Minimum Rate as
the same may have been increased in accordance with the Services
Agreement. If Britoil and the Contractor have not agreed to the
terms of such extension by 31 March 1999, Contractor shall,
notwithstanding anything to the contrary in this Clause 18, have
the right to commit to provide the Vessel to any third party.
19. Relationship of Parties
Nothing in this Agreement shall create, or be deemed to create, a
partnership between the Parties.
20. Guarantee of Performance; Deed of Covenant
20.1 Holdings shall upon execution of the Services Agreement deliver to
Britoil a guarantee (in a form substantially similar to that
contained in Schedule 4) for the Contractor's performance of the
Services and shall procure the granting of a opinion letter in a
form substantially similar to that contained in Schedule 5, if so
requested. For the avoidance of doubt such guarantee shall
supersede any existing guarantee granted by Holdings to Britoil in
connection herewith.
20.2 The Contractor and Britoil shall upon execution of the Services
Agreement enter into a supplemental deed amending Clause 2.2 of
the Deed of Covenant entered into by them of even date herewith,
inserting the new details of the liquidated damages clause
contained in the Services Agreement.
21. Waiver
Any Waiver by any Party of a breach of any provision of this
Agreement shall not be considered as a waiver of any subsequent
breach of the same or any other provision.
22. Severance
If any provision of this Agreement is held by any court or other
competent authority to be void or unenforceable in whole or part,
the other provisions of this Agreement and the remainder of the
unaffected provisions shall continue to be valid.
23. Notices
23.1 Any notice or other information required and authorised by this
Agreement to be given by either Party to the other may be given by
hand or sent (by first class pre-paid post, telex, cable,
facsimile transmission or comparable means of communication) to
the other Party at the address referred to herein or to such other
address as notified hereunder for such purpose.
23.2 Any notice or information given by post under Clause 23.1 which is
not returned to the sender as undelivered shall be deemed to have
been given on the 2nd day after the envelope containing the same
was so posted; and proof that the envelope containing any such
notice or information was properly addressed, and sent by first
class pre-paid post, and that it has not been so returned to the
sender, shall be sufficient evidence that such notice or infor-
mation has been duly given.
23.3 Any notice or information sent by telex, cable, facsimile
transmission or comparable means of communication shall be deemed
to have been duly sent on the date of transmission, provided that
a confirming copy thereof is sent by first class pre-paid post to
the Party receiving such transmission at the address as specified
in Clause 23.1 within 24 hours after transmission.
24. Governing Law
This Agreement shall be governed by and construed in accordance
with English Law and the Parties submit to the non-exclusive
jurisdiction of the Courts of England and Wales.
IN WITNESS WHEREOF the parties hereto have signed this Agreement the
day and year first written above.
for and on behalf of BRITOIL PUBLIC LIMITED COMPANY
for and on behalf of READING & XXXXX (CALEDONIA) LIMITED
for and on behalf on READING & XXXXX CORPORATION
===========================================================================
SCHEDULE 1
FUNCTIONAL SERVICE SPECIFICATION
The Services to be provided in the Operating Area will include but are
not limited to, the activities listed in this Schedule.
The Contractor will work for relevant Britoil operated assets, to
provide the Vessel (and other Contractor's Equipment) for each asset to
undertake their activities. The allocation of the Services to each
Britoil operated asset which calls for them shall be coordinated by a
nominated Britoil representative and a nominated Contractor
representative.
The services include provision of the Vessel, other Contractor's
Equipment, marine crew complement, Vessel maintenance and shore side
management team,
PART 1
The services shall comprise the provision of expertise, contractor's
personnel and contractor's equipment including the Vessel after
Conversion at all times working in association with a number of service
contractors on the Vessel to enable any of the following activities to
be carried out in the Operating Area:
A Tree Installation
Installation of a subsea christmas tree (and flowbase) on a
suspended well (Tree size approx. 4m x 4m x 4m, weight approx. 40
tonnes). This may include removal of debris or pressure retaining
cap from wellhead, installation and leak testing of tree, removal
of plugs from well. Trees will be run or retrieved on rigid riser
simultaneously with the coiled tubing BoP and LRP (all supplies by
Britoil). To improve rough weather performance tree landing will
use active heave compensation and splash zone position guidance.
B Well Hook Up
This may include installation, pull in, hook up and function/leak
testing of:
- flexible jumper hoses between manifold and well,
- control umbilicals between Subsea Umbilical Termination (SUT)
and well.
Full function testing of tree following installation.
Connectors used will include the DMaC Connector (current max
flowline size 10" x 8" x 6").
C Well Intervention
By coil tubing (typically 6000m of 2 3/8" tubing), wireline
(slickline/3/16" braided) or electric line. Types of
intervention will include:
- Well Logging
- Well clean up, Chemical treatment and stimulation (i.e.
including acid and cement)
- Well maintenance (gas lift valve replacement, scale mill out,
installation and retrieval of plugs and DHSVs etc)
- Water/Gas shut off (using plugs, cement, gels etc)
- Fishing/junk retrieval
- Well abandonment (plugs, tubing perforation, cement)
- N2 kick off
- Coiled tubing sidetracks
D Subsea Construction
This may include:
- medium lift subsea construction activities such as
installation of manifolds, clump weights (12m x 7m, 120
tonnes), and SSIVs.
- installation and testing of flowline and umbilical jumpers
- Installation of FPSO risers (reels typically 5m wide by 8m
diam, 220 tonnes)
- subsea connectors will include use of DMaC.
It is accepted that such work may require substantial equipment
removal/mobilisation and possibly some specific Vessel
modification to be mutually agreed which will be at Britoil's
expense. To facilitate this as far as practical, deck equipment
should be modular.
E ROV Support
General ROV support as required (eq to pipelay or heavy lift
construction).
F Subsea Inspection, Repair and Maintenance
General IRM of all subsea equipment to be carried out by third
parties.
G Accommodation
The Vessel may be used for short term accommodation if required,
with workers being shuttled by helicopter to FPSO, construction
barge etc.
Included in the daily rate is catering for all Contractor's
personnel and up to 20 Britoil and/or third party personnel. A
day rate for extra personnel up to a limit will be agreed.
H Fuel and Transportation
Fuel, transportation of Contractor's personnel and supplies
between shorebase and the Vessel and all third party services
shall be provided by, or shall be to the account of, Britoil.
PART II
Roles & Responsibilities
The roles and responsibilities of Britoil, the Contractor and other
service providers (at Britoil's cost) shall reflect the following:-
Role Britoil Contractor Other
Service
Provider
A. Vessel Services
- Structural capability *
- Fuel *
- Safety Case *
- Maintenance *
- Dry docks *
- Marine Crews *
- Supply boat/
helicopter/logistics *
- Accommodation for [ ] *
- Catering for POB
up to [ ] *
- Onshore management *
- Xxxxxxx/Mast *
- Crane capacity of [ ] *
- Hydraulic control package *
- Existing DP capability *
- Suitable workfloor over moonpool *
- Active Heave compensation *
B. Service Operations
- Coiled tubing
operations * *
- Wireline operations * *
- Subsea tree running/
retrieval/handling * *
- Riser storage/
handling/tensioning * *
- Subsea well abandonment *
- All service equipment
and personnel (eg. CT unit,
completion riser, stimulation
units, ROV unit) *
N.B. Items where more than one party is indicated as responsible are
those where it is intended the Contractor provides a facility
where such activity can be carried out on the Vessel by another
service provided using its own equipment.
===========================================================================
SCHEDULE 2
Performance Criteria
The Parties agree that it is anticipated that conversion of the Vessel
for the purposes outlined in Schedule 1 will not require a major change
to the hull and structure of the Vessel, outwith the current vessel
design envelope. Consideration will be given to the advantages of
cross bracings or blisters or other modifications to improve the
efficiency and life of the Vessel or increase deck load capability.
The need for such modifications will be determined by mutual agreement
and in the context of the requirements of Schedule 1. The DP system as
upgraded for utilisation of the Vessel for the Foinaven Services
Agreement will be maintained by the Contractor for the provision of the
Services and accepted as satisfactory for the performance of the
Services.
=========================================================================
SCHEDULE 3
Outstanding Matters
Item Matters to be Finalised Action
Schedule I,
Part 1C Contractor to confirm Vessel Contractor
capability re coiled tubing
sidetracks
Schedule I,
Part 1D Contractor to confirm Vessel Contractor
capability and Parties to
agree re clump weights
Schedule I,
Part 1G Day rate and number of Britoil/
additional personnel to be Contractor
agreed
Schedule II,
Part 2A Contractor to confirm Contractor
accommodation and catering
capabilities
Schedule II,
Part 2A Crane Capacity to be Britoil/
confirmed Contractor
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SCHEDULE 4
[Guarantee]
==========================================================================
SCHEDULE 5
[Opinion Letter]
